Swiss regulator says 2 banks’ crisis plans insufficient
Concerns have been expressed by Switzerland’s financial watchdog FINMA over the recovery and resolution strategies of Zuercher Kantonalbank (ZKB) and PostFinance, two of the nation’s largest banks. The regulator questioned the banks’ capacity to function in the case of a crisis in a statement made public on Wednesday. ZKB had not yet amassed the necessary capital, according to FINMA, while PostFinance’s emergency preparedness needed to be adjusted. The evaluation evaluated the emergency plans of the major Swiss banks as of the end of 2022, excluding the combination of Credit Suisse and UBS. The regulator, however, had expressed satisfaction with the crisis plan created by Credit Suisse the previous year and noted that the bank had an emergency plan that was prepared for implementation.
In a buyout planned by Swiss regulators this month, UBS had to save Credit Suisse. In order to better prepare for future crises, Urban Angehrn, chief executive of FINMA, agreed that there were significant lessons to be gained from the Credit Suisse disaster. Following the takeover, the regulator shifted responsibility for the mess at the second-largest bank in the nation, claiming that it had been swift to act, and it sought for stronger authority to hold institutions accountable.
NewsOTG gathered that the worries expressed by FINMA come at a time when the ongoing COVID-19 pandemic is posing unprecedented issues for the world’s financial sector. Particularly, negative interest rates and the effects of the epidemic on the economy are major challenges for Swiss banks. The warning from the authorities serves as a reminder for banks to be attentive in their crisis planning and make sure they have enough capital reserves to withstand any storms. The announcement has shocked the Swiss banking community, and many experts are pushing for quick action to solve the problems brought up by FINMA. Working closely with the regulator will be necessary for ZKB and PostFinance to resolve the issues brought up and take action to improve their capital buffers and emergency plans.
In view of the recovery and resolution plans of Switzerland’s main banks, FINMA’s evaluation concludes that caution and readiness are required in the face of persistent economic challenges. Although the regulator found Credit Suisse’s crisis plan to be adequate, ZKB and PostFinance must act right away to allay the regulator’s worries. To maintain stability during economic instability, the global financial sector must be alert and ready for anything.